Question

A mutual fund manager has a $20 million portfolio with a beta of 1.75. The risk-free rate is 5.50%, and the market risk premium is 5.0%. The manager expects to receive an additional $5 million, which she plans to invest in a number of stocks. After investing the additional funds, she wants the fund's required return to be 16%. What should be the average beta of the new stocks added to the portfolio? Do not round intermediate calculations. Round your answer to two decimal places. Enter a negative answer with a minus sign.

Answer #1

Portfolio Beta = Wtd Avg Beta of securities in that Portfolio.

Let X be the Beta of new stocks.

Computation of Portfolio Beta:

Portfolio Req ret = 16%

CAPM ret = Rf + Beta (Rm - Rf)

16 % = 5.5% + beta (5%)

Beta (5% ) 10.5%

= 2.10

portfolio Beta:

From above Two

2.10 = 1.40 +0.2X

0.2 X = 0.7

X = 0.7 / 0.2

= 3.5

A mutual fund manager has a $20 million portfolio with a beta of
0.75. The risk-free rate is 4.25%, and the market risk premium is
4.5%. The manager expects to receive an additional $5 million,
which she plans to invest in a number of stocks. After investing
the additional funds, she wants the fund's required return to be
16%. What should be the average beta of the new stocks added to the
portfolio? Do not round intermediate calculations. Round your...

A mutual fund manager has a $20 million portfolio with a beta of
1.35. The risk-free rate is 5.75%, and the market risk premium is
6.5%. The manager expects to receive an additional $5 million,
which she plans to invest in a number of stocks. After investing
the additional funds, she wants the fund's required return to be
12%. What should be the average beta of the new stocks added to the
portfolio? Do not round intermediate calculations. Round your...

A mutual fund manager has a $20 million portfolio with
a beta of 1.55. The risk-free rate is 3.00%, and the market risk
premium is 4.5%. The manager expects to receive an
additional $5 million, which she plans to invest in a number of
stocks. After investing the additional funds, she wants
the fund's required return to be 18%. What should be
the average beta of the new stocks added to the portfolio? Round
your answer to two decimal places.

A mutual fund manager has a $20 million portfolio with a beta of
1.4. The risk-free rate is 5.5%, and the market risk premium is 9%.
The manager expects to receive an additional $5 million, which she
plans to invest in a number of stocks. After investing the
additional funds, she wants the fund's required return to be 19%.
What should be the average beta of the new stocks added to the
portfolio? Negative value, if any, should be indicated...

A mutual fund manager has a $20 million portfolio with a beta of
1.4. The risk-free rate is 4.5%, and the market risk premium is 5%.
The manager expects to receive an additional $5 million, which she
plans to invest in a number of stocks. After investing the
additional funds, she wants the fund's required return to be 12%.
What should be the average beta of the new stocks added to the
portfolio? Negative value, if any, should be indicated...

A mutual fund manager has a $20 million portfolio with a beta of
1.40. The risk-free rate is 5.75%, and the market risk premium is
5.5%. The manager expects to receive an additional $5 million,
which she plans to invest in a number of stocks. After investing
the additional funds, she wants the fund's required return to be
14%. What should be the average beta of the new stocks added to the
portfolio? Negative value, if any, should be indicated...

Problem 8.17: Portfolio Beta A mutual fund manager has a $20
million portfolio with a beta of 0.75. The risk-free rate is 3.25%,
and the market risk premium is 5.0%. The manager expects to receive
an additional $5 million, which she plans to invest in a number of
stocks. After investing the additional funds, she wants the fund's
required return to be 20%. What should be the average beta of the
new stocks added to the portfolio? Do not round...

PORTFOLIO BETA
A mutual fund manager has a $20 million portfolio with a beta of
1.20. The risk-free rate is 5.00%, and the market risk premium is
6.0%. The manager expects to receive an additional $5 million,
which she plans to invest in a number of stocks. After investing
the additional funds, she wants the fund's required return to be
12%. What should be the average beta of the new stocks added to the
portfolio? Do not round intermediate calculations....

PORTFOLIO BETA
A mutual fund manager has a $20 million portfolio with a beta of
1.50. The risk-free rate is 6.50%, and the market risk premium is
4.5%. The manager expects to receive an additional $5 million,
which she plans to invest in a number of stocks. After investing
the additional funds, she wants the fund's required return to be
17%. What should be the average beta of the new stocks added to the
portfolio? Do not round intermediate calculations....

17) A mutual fund manager has a $20 million portfolio with a
beta of 0.95. The risk-free rate is 3.75%, and the market risk
premium is 7.0%. The manager expects to receive an additional $5
million, which she plans to invest in a number of stocks. After
investing the additional funds, she wants the fund's required
return to be 13%. What should be the average beta of the new stocks
added to the portfolio? Do not round intermediate calculations.
Round...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 1 minute ago

asked 20 minutes ago

asked 32 minutes ago

asked 53 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago